Skip to main content

About this Show

The Journal Editorial Report

News/Business. Paul Gigot discusses news, politics, society and finance. New. (CC) (Stereo)

NETWORK

DURATION
01:00:00

RATING

SCANNED IN
San Francisco, CA, USA

SOURCE
Comcast Cable

TUNER
Virtual Ch. 760 (FOX NEWS HD)

VIDEO CODEC
mpeg2video

AUDIO CODEC
ac3

PIXEL WIDTH
1280

PIXEL HEIGHT
720

TOPIC FREQUENCY

California 11, Paul 10, United States 9, Dan 8, America 8, Washington 7, Virginia 6, Us 6, Obama 6, New York 5, Kim 5, Barack Obama 5, Europe 5, U.s. 5, Maryland 5, Steve 4, Phillips 3, France 3, Jason 3, Citi 3,
Borrow a DVD
of this show
  FOX News    The Journal Editorial Report    News/Business. Paul Gigot discusses news,  
   politics, society and finance. New. (CC) (Stereo)  

    December 29, 2012
    11:00 - 12:00pm PST  

11:00am
>> this week on the journal
11:01am
editor ral report. it was tough for conservatives on the national level, but in the state hopeful signs of reform and looking forward. is the economy headed for rebound or recession, will the new year finally bring a showdown with iran? our panel is here with their prediction. ♪ >> welcome to this special edition of the journal, editorial report. as we look back on the year that was and the challenges facing us in 2013. first to our big stories of 2012. and america's left turn from the supreme court's landmark health care decision to the reelection of president barack obama. and politics headed in a decidedly liberal direction, so what happened and what does it mean for the country going forward. joining us columnist and
11:02am
detail editor, dani henninger and kim strassel. dan, we like to say for a long time we live in a center-right country. if you look at the last two presidential elections that doesn't seem to be the case. are we living now in a new, progressive era? >> in terms of the presidency, i think we are, paul. i'm not sure about the country. barack obama i think is the center left or left wing president since the great depression and i think that what barack obama has in mind to do is indeed to redistribute income from the top downward, not to cut spending, but to increase spending, it's explicit from a 20% of gdp to 25% gdp and rather than cut spending raise taxes as necessary to support that spending and i would say that is in fact essentially the french model. and the question is whether it can support enough growth in
11:03am
the economy. >> paul: taxes are going up, we know that, spending, going up for sure even before the health care law kicks in. so, we are moving in that direction, particularly in the entitlement state. not reforming it, but actually expanding it. >> aen what happened this year was the supreme court helping this along, you have the justices essentially rewrite legislation changing the plain text that congress passed in order to declare obamacare constitutional, which is a little scary, that that highest justices in the land would take that sort of activist role and you mentioned france, dan, that's scary. the back drop of this whole presidential year is europe. we know where the path leads. and the turmoil and welfare states and how unsustainability and the high unemployment that comes with them and that was the back drop of our presidential campaign. >> paul: okay, the voters said, yeah, we're going to keep moving in that direction, kim. i mean, how, what do you think
11:04am
the electorate is here, behind the choices that jason just suggested they might be? >> barack obama won this election by very effectively making this a referendum about his opponent, mitt romney. so if you went out and you asked most americans, do you think barack obama did a great job in his first term? do you want significantly higher taxes? do you want the government to do nothing about spending? are you happy with obamacare? most would say no, but in the end the choice was between a president who said things aren't great, but i'm still going to try to make them better and a guy he painted as not having a plan and not identifying with the average wants and needs of middle class americans and in the end, people decided to stick with the devil they knew rather than the one they didn't. >> paul: so the election, the republican defeat was big, but it wasn't overwhelming in a sense of repudiation, kim, as
11:05am
far as a republican platform and their agenda? >> no, i think the reason, look, this country had the opportunity in this election to once again hand completely controlled government to democrats. everyone in the house was up for reelection and yet, they continued to give republicans, majority there. they liked divided government and i think you've got to look to the number of states that have elected very conservative governors who are doing the exact opposite of what barack obama is doing at the federal level. >> dan, there are some real implications, consequences to the direction, the policy direction the president is setting, one of which, there's going to be a lot less money for defense and so the american ability to project power abroad is going to decline and maybe rapidly. the key question, economic growth. can we get out of this 1% to 2 1/2% ban we've been in for four years now and break out of that, if we can't, the kind of commitments the government make, the government is making are just going to be unaffordable. >> you know, i think i've previously cited the noble
11:06am
economist, noble laureate, university of chicago who looked at this closely and shade why aren't we get growth coming and cited europe, and fell off the growth path around 3% after world war ii and he concluded, as jason was just suggesting, the welfare commitments they'made. it was unsustainable and the growth rate dropped permanently and lucas raised the question whether the united states itself was on this lower, long-term growth path. that's the question. >> so, jason, what's-- where do we go from here? particularly if you're conservative, what are your-- where does the comeback begin? does it begin in somehow accommodating the middle and saying, look, it's a progressive year and we've got to be a little less progressive and a bill more efficient in terms of administration or do you put both colors out there as an alternative? >> i think it starts with the g.o.p. expanding its current coalition and i think that
11:07am
hispanic voters are one way to go. you have to remember, just eight years ago, 44% of the hispanics voted for the republican presidential candidate and four years ago, 31% and this years 27%, this is a swing voting block and republicans need to go after it. and you know, paul, i consider recognition of a problem to be progress itself and maybe the g.o.p. is finally going to reach some-- come to grips with the demographic reality? >> yeah, i think so. and dan, what about this idea of you go to the middle or do you fly with both colors? >> well, i don't -- i think they-- it will be hard to go entirely to the middle because i think the electorate, the ones who did not vote for barack obama voted against this vision and voted against it very strongly and i think the republicans would put that at risk if they went too far to the middle. >> okay. when we come back, states have changed from kansas to michigan, to rhode island,
11:08am
reform is in the air. find out how some states are bucking the washington trend next. thanks to our explorer card. then, the united club. my motr was so wrong about you. next, we get priory boarding on our flight i booked with miles. all because of the card. and me. okay, what's the plan? plan? mm-hmm. we're on vacation. there is no plan. really? [ male announcer ] the united mileageplus explorer card. the mileage card with speci perks on united. get it and you're in. when the doctor told me that i could smoke for the first week... i'm like...yeah, ok... little did i know
11:09am
that one week later i wasn't smoking. [ male announcer ] along with support, chantix is proven to help people quit smoking. it reduces the urge to smoke. some people had changes in behavior, thinking or mood, hostility, agitation, depressed mood and suicidal thoughts or actions while taking or after stopping chantix. if you notice any of these stop taking chantix and call your doctor right away. tell your doctor about any history of depression or other mental health problems, which could get worse while taking chantix. don't take chantix if you've had a serus allergic or skin reaction to it. if you develop these stop taking chantix and see your doctor right away as some can be life-threatening. if you have a history of heart or blood vessel problems, tell your doctor if you have new or worse symptoms. get medical help right away if you have symptoms of a heart attack. use caution when driving or operating machinery. common side effects include nausea, trouble sleeping and unusual dreams. it helps to have people around you... they say, you're much bigger than this. and you are. [ male announcer ] ask your doctor if chantix is right for you. [ male announcer ] jill and her mouth have lived a great life. but she has some dental issues she's not happy about.
11:10am
so i introduced jill to crest pro-health for life. selected for people over 50. pro-health for life is a toothpaste that defends against tender, inflamed gums, sensitivity and weak enamel. conditions people over 50 experience. crest pro-health for life. so jill can keep living the good life. crest. life opens up when you do. ♪ >> well, washington may have made a big left turn this year, but in states across the country, another kind of reform is in the air. we begin in michigan which this month became the nation's 24th right to work state. we're back with jason riley and kim strassel and wall street journal senior economics writer steve moore also joins the panel.
11:11am
so, steve, this is really an interesting story that i don't think gets enough attention. >> i agree. >> paul: the reforms taking place across the country in a lot of states. who are the stars you're looking at? >> i entirely agreement with your premise, paul. if you look at, talk about the demise of the republicans on the national levels we're not seeing that on the state level. there are 30 republican governors today in america, the republicans actually picked up a governorship in north carolina so that south now is almost entirely republican, whereas just 25 years ago, it was pretty entirely democratic. and it's not just the south. states like-- >> what are they doing with that power, that's the interesting thing. >> so, they have the power and they are actually using it, af got states like kansas, and florida that have been cutting taxes aggressively to promote jobs. you've got a lot of the states in the mountain states that are republican, where they're aggressively promoting pro energy drilling policies to get at the national resources
11:12am
and of course, the big story that you mentioned, paul, is what's happening with right to work, it wasn't just michigan, sometimes we forget earlier indiana became a right to work state, too, so, two midwestern states that have traditionally been pretty heavily unionized moved to right to work and i wouldn't be surprised if next year we see a couple more states fall. >> interesting contrast in maryland and virginia, neighboring states. you have in virginia, a republican governor cutting taxes, cutting spending. in maryland, you have a liberal democratic governor who's raised tacks all kinds of taxes, income taxes, gas taxes sales taxes, you name it. as a result virginia has a job growth rate that is three times that of maryland. virginia has a lower unemployment rate. so you see that contrast and paul, i think in this election, it actually worked to the president's benefit in some of the swing states like o-ohio and virginia and you had the voters in the states experiencing above average growth thanks to the policies
11:13am
of republican governors. >> paul: kim, then you see the alternatives and let me mention one state where democrat gina amando the state treasurer pushed through a terrific pension reform, probably the best in the country, but if you look at other states where the democratic coalition is dominant, illinois, for example, new york state and california, you see a very different policy mix. which direction are they going? >> their policy mixes to mirror what's happening in washington, which is do not address any of your structural spending problems and need to add spending and ask your taxpayers in particular to-- the wealthier taxpayers to contribute more to that and it's a tax and spend policy. one of the problems that the states have, obviously it's not helping their economic growth and you're beginning to see a huge contrast on the ground between the economic situations of states that are reforming, and those that are not. >> paul: give us a couple of
11:14am
examples, kim, where is growth occurring where you're seeing it. the jobless rate, for example, in illinois the last time i checked was 8.8%. >> yes. >> paul: and meanwhile, wisconsin 6.9%, very interesting contrast. >> look at indiana, where it's also low, and-- yeah, north dakota, which by the way, steve mentioned you know, the fracking boom going up there. and i think it's below 5%, it's astonishing. >> paul: it's 3%. >> yes. >> paul: so, what about, steve, where do you think this is going? i mean, we've got, you know, the states are supposed to be laboratories are democracy and we're going to see the next two, three, four years. >> no doubt about it. >> paul: what laboratories work and what laboratories don't. >> no question about it. i think the big story in america, paul, just as i was talking about the red states getting redder, the blue states like california and new york, my home state of illinois got bluer, republicans are kind of endangered species in those
11:15am
states and now, you have a very sharp contrast, an almost economic vulcanization that's going on in america, states like california massive, cap and trade and more so than any other time in our lifetime, paul, you're going to see a divergent path taken by states like california that are very liberal, and states in the south and mountain states that are going to promote tax cuts and reductions in pension costs and i think it will be a real experiment to see which of these models work. >> steve, are you predicting that california is not going to get down from its current jobless rate or is going to see an outflow of capital really? that state, remember, it's tremendous, it still has tremendous resources and agriculture and high-tech, obviously, in the hollywood area, so, are you overdoing some of the pessimism here about california? >> no, i think it's marrhard to
11:16am
see any optimistic forecast, you can go all over the country, i can't tell you how many time i run into businessmen, i used to be in california and now i'm in texas or virginia or florida or nevada, i think that state is in real trouble and has big implications for the national academy, paul. because if california isn't growing, it's hard for the nation to grow. >> i agree with that, i think it's a real setback, if california keeps growing, so, kim-- >> you mentioned maryland and we're talking about an outflow. the democratic governor there, martin o'mally is a lean mean barack obama. and guess what all the millionaires left maryland. and so we know this is what happened. >> he's a maxi-me barack obama. >> could say-- >> and we wants to go to the national level. i think he has his eye on 2016. okay, when we come back, from energy to education, to technology. our panel's pick for the good news story of the year. hmm, it says here that cheerios helps lower cholesterol
11:17am
as part of a heart healthy diet. that's true. ...but you still have to go to the gym. ♪ the one and only, cheerios olaf gets great rewards for his small business! pizza! [ garth ] olaf's small busins earns 2% cash back on every purchase, ery day! helium delivery. put it on my spark card! [ pop! ] [ garth ] why settle for less? great businesses deserve great rewards! awesome!!! [ male announcer ] the spark business card from capital one. choose unlimited rewards with 2% cash back or double miles on every purchase, every day! what's in your wallet? we don't let frequent heartburn come between us and what we love. so if you're one of them people who gets heartburn and then treats day afr day...
11:18am
block the acid with prilosec otc and don't get heartburn in the first place! [ male announcer ] e pill eachmorning. 24 hours. zero heartbur
11:19am
11:20am
>> well, just when you thought there wasn't that much to cheer about in 2012 our panel is here with good news from the wall street editorial board member, mary anastasia o'grady starts us off. what's your big news of the year. >> it's a high energy story, paul. >> paul: just like you, mary, high energy. >> basically we have through technology, the united states has discovered that it has a huge amount of both shale oil and shale gas and can get it out of the ground, as i say, thanks to technology. and you know, that's not just a u.s. story it's kind after north american story. >> paul: right. >> a ton of oil in canada, there's lots of the same geological formations in
11:21am
mexico, and so, you know, there's a lot of energy that can come up and, for example, the ceo of fluor, the largest construction company says there's at least 30 billion dollars of potential projects just around the u.s. gulf of mexico. >> paul: people are talking now and even by 2020 which isn't that far away we could be self-sufficient in terms of providing most of the oil, gas, we get domestically. what are the implications of this for the larger energy? not just for the energy economy, but for things like manufacturing and consumer prices? >> well, certainly, you know, obviously, residential heating, things like that would be more affordable and make us more competitive in manufacturing, but there's another angle that's also very interesting and that has to do with exports. we could actually become the lead are producer of energy for the emerging markets. energy demand in this country is going down, but in the rest
11:22am
of the world it's going up so this would be an enormous source of jobs and also tax revenue. >> paul: and the big threat to this is politics, if somehow regulators get in there and say, for whatever reason we're going to stop the shale gas revolution, but there are those opposed, sierra club, moratorium on fracking in the state of new york and though right across the state in pennsylvania it's booming. >> just as one example, in california there's something called the monteray shale. it has more reserves than the bakken in north dakota and texas reserves put together, but questions whether the california environmentalists will allow us to go after. >> paul: i think the answer is no. jason, keep the good news coming. >> there was a lot of good news on the education front. the education reform front i should specify and a ballot initiative in the united states, and one with no
11:23am
charter schools at all. would allow the creation of them. in georgia, a ballot initiative that would expand the current number in that state and in louisiana, a state wide voucher program expanded, signed into law by governor bobby jindel. good news on getting people without access to public schools better access. >> paul: why this momentum now for school choice, whether charters or vouchers? what's behind it right now? >> i think it's the track record of the system. the status quo. and the more we talk about the reality of options out there for people, paul, in georgia, one in three high school freshmen does not graduate in four years. i mean, it's incredible. in news news, something like 36% of schools were ranked d or f by the state. it's just hard to understand. >> paul: and grade on a curve. >> it's hard to defend those kinds of results and that's
11:24am
why i think the momentum is really with reformers. >> paul: so liberals by reality, not just liberals, but parents, too, you even-- and this is interesting to me, hollywood has changed and culturally tend to be oppose today this kind of thing, but they've turned and said maybe parent trigger movie this year and maybe they are seeing a change in direction, a tipping point. dan, can you match those two? >> i think i can. and this is one example, in of there's a company who this year came up with a robotic arm which attaches to the arm of people who have had strokes and they're paralyzed. allows the brain to transmit nerve signals to the muscles in the arms and robotic arm picks it up and allows the arms to move. this is the most extraordinary thing, but we're able to do that sort of thing.
11:25am
another example is 3-d printers which i think i can explain. you take liquid plastic with a pen and the 3-d printer outpits an object. this could revolutionize informi manufacturing. these are the sorts of ideas based on the kind of knowledge that you produce in the united states and as we know, knowledge in the industrial revolution is what's driven economies forward and it's still possible in the united states. >> paul: you know, dan, we had visits this year from a lot of ceo's and i would struck by paul otelinni and jeff bezos. and it's going to double every couple of years and continue and roll through the economy, so you're going to have a digital revolution with artificial intelligence, voice
11:26am
recognition, things that transform the way we live our lives no matter, even if the economy keeps growing at 1% or 2%, one big question, is that growth and innovation going to happen here in the united states or more of it overseas in places like china? >> yeah, well, take this robotic device i just-- this is a medical device and under the obamacare law, medical devices will be subject to a tax because they have to pay for obamacare. >> paul: yes. >> this is the sort of thing, if we keep doing will suppress the growth of technology in this country and then again, there's the issue of immigration policies. a lot of this technology driven by engineers who come from asia, silicon valley and has been the result of immigration into the united states. if we don't stand in the front of these things, we can grow. >> paul: dan, thank you. coming up in our second half hour, a look ahead to 2013. is the economy poised for a comeback or high unemployment
11:27am
continues to drag us down. get ready for obamacare, what to know as key provisions kick in. ♪ constipated? yeah. mm. some laxatives like dulcolax can cause cramps. but phillips' caplets don't. they have magnesium. for effective relief of occasional constipation. thanks. [ phillips' lady ] live the regular life. phillips'.
11:28am
11:29am
>> live from america's news headquarters, i'm heather chilleder. here we go again. more snow is headed toward the northeast, where a major winter storm already dumped several inches in. two powerful systems are hitting the east coast by today. states from south carolina to new york already have issued
11:30am
severe weather warnings. and as america deals with a fiscal crisis, france is facing its own battle. a high court just throwing out a plan to tax the wealthy at 75%, saying it's unfair. it was a measure president francois hollande would help cut the deficit budget. the court took issue with not with the tax, but taxing household equally. and for the latest headlines log onto foxnews.com. you're watching the most powerful name in news, fox news channel. >> paul: welcome back to this special he edition, journal he had t.editorial report. and this year continued high unemployment and slow economic growth.
11:31am
what can we expect in 2013? we're back with dan henninger, mary anastasia o'grady and dan moore. mary explain the slow growth and the markets. >> if respect to the markets, i would say if you look at a chart for, for example, the s&p 500, you go back to april of 2011 to october of 2012. you're basically flat. there's a lot of churning up and down, but in the last months a pickup there and certainly, from the end of -- from the beginning of this year we saw a run on the market, but you don't have a great return if you're a long-term investor. >> paul: right, so, okay, if growth is still slow, okay, why are-- and some people are still investing in companies and the corporate balance sheets earnings have been pretty good, you know, they've cleaned out a lot of the debt from the crisis. could we be poised here for
11:32am
faster growth going forward? >> well, i think one of the things that explains why the corporate sector is doing well is because they basically have access to money at zero interest rates. that's not true for the broader population and not true for a lot of small businesses, it's just true for, you know, large corporations who can borrow very cheap money. you have high unemployment, which means that employers can ring more productivity out of their workers. >> right. >> and you know, workers need jobs. so, i think if you take all of those factors into account, you know, you're not looking at an environment that is as bullish for the broad american public as it might seem, looking at the stock market. >> dan, one of the, kind of a side follow, there have been 312 stimulative easings of one policy stimulus and central bank easings over the last 16 months over the world. that's extraordinary. 312. so one's answer to this
11:33am
question may be that there's an awful lot of money sloshing around from central banks around the world who are saying, look, we've got to drive this company and they're opening the spigots. >> they are, but the question, what is happening to that capital. is it deployed for productive uses? i think in the case of the united states we've seen what's been written about is that many companies have spent hundreds of billions of dollars buying back their own stock. they've been borrowing this money cheaply and using it to buy back their own stock, rather than investing in productive capital projects and there's a cool of thought that says most of the growth in the stock market has been because companies have been net buyers of stock, whereas retail investors and the mutual fund funds have been net sellers of stock. so we're not in a very productive economy right now. >> we've seen investment in energy, no question about that across the country, but what about our favorite, steve moore here, what do you think?
11:34am
is 2013 going to turn the corner like ben bernanke and others are saying? >> i never like to bet against the american economy and there are so many spirits. and we haven't had a real recovery in four years. you get the feeling that the economy is ready to pop, but the countervailing argument everything washington is doing expansion. and i entirely agree with your previous conversation that energy and technology are just drivers of high powered growth, but the countervailing force i think follows the higher tax rates coming in 2013 and some of the regulations and obamacare are holding back business's willingness to expand and hire more workers. >> paul: not just the regulatory wave on health care, there's huge with dodd frank reform and huge pentup regulatory wave hit on energy. all kinds of rules hitting
11:35am
utilities and energy company. so who wins? washington or the private economy? >> well, i think, actually if you look at a couple of indicators, it's not good for at least the first half of 2013. one is business investment. business investment is now weaker than in 2008. and on top, so you have lots of companies sitting on their hands and you also have small business confidence taking a huge hit in november, which is very worrying. and person per capita, person income. >> it's still down from even at the start of this recovery. steve, you wanted to get in there? >> yeah, let me be the bull here for a minute. we talk auld time about the energy sector and it's not just the energy sector, we've had a mini renaissance in manufacturing in this country, in transportation because of the fact the energy prices are falling and makes the american much more competitive at the margin. i think 2013 is going to see continued declines in energy
11:36am
prices. that's like a tax cut for the american consumer, paul. >> but, paul, the thing we haven't mentioned here is unemployment. we've had high unemployment for four years which means a lot of people out of jobs. we would need a tremendously bullish economy and i'm saying like 4%, to produce enough jobs, it would take a decade to get back to where we were before this recession. >> paul: right, sure, no question about it. >> we just need to do whatever we can to allow economic growth in this country. but declining energy prices are not necessarily good for energy production. because at some point, energy producers are going to say the price is too low and to mitigate that problem, they have to be able to export. the obama administration hasn't decided-- >> export of natural gas and that's a key policy move ahead. >> paul: and the new world as the arab spring continues to deteriorate and in iran nuclear program continues to progress. look at the foreign policy challenges facing the united states in 2013. because youry wants that pink castle thing.
11:37am
and you realldon't want to pay more than you have to. only citi price rewind automatically searches for the lowest price. and if it findone, you get refunded the difference. just use your citi card and register your purchase online. have a super sparkly day! ok. [ male announcer ] now all youeed is a magic carriage. citi price rewind. start saving at citi.com/pricerewind. [ buzzing ] bye dad. drive safe. k. love you. [ chirping, buzzing continues ] [ horn honks ] [ buzzing continues ] [ male announcer ] the sprint drive first app. blocks and replies to texts while you drive. we can live without the &. visit sprint.com/drive.
11:38am
aww man. [ male announcer ] returns are easy with free pickup from the u.s. postal service. we'll even drop off boxes if you need them. visit usps.com pay, print, and have it picked up for free. any time of year. ♪ nice sweater. thank you. ♪
11:39am
11:40am
>> from iran's nuclear ambition toss china's nationalist impulses, the new year, no doubt, will bring its own share of foreign policy challenges. here with a look at which are likely to be the biggest, wall street foreign affairs, bret, and matt. bret, the world is safer now than a year ago? >> think about it we're that much closer to a nuclear confrontation or crisis
11:41am
for what do i want to see happen in the world in the next four years and how am i going to get there. >> the strategy though seems to be without quite advertising it, american withdrawal and retreat in the world and going to cut the-- gash the defense budget and people understand it. we're pulling out of afghanistan, and we are already out of iraq and we've abdicated anything in syria, so, the message around the
11:42am
world, isn't it, is that the u.s. is going to be much-- going to lead a lot less than it has. >> and we had the right strategy, i think we could have the right strategy and is an opportunity. >> well, look, there is an analogy here. in the 1920's it became clear that the victorious parties in the united states, france, britain weren't prepared to enforce the global order that they had imposed at the versailles settlement and it became obvious to countries like germany and the new soviet union that they could violate that order with impunity. so, beginning around 1922 you had two decades leading to the second world war of this double process, revisionist regimes that want today revise the structure ofl power and status quo power and today there's only one status quo power and under this administration-- >> is iran test whether these
11:43am
countries, the united states in particular going to enforce this world order? >> look, you have three presidents, president clinton, bush and obama said that nuclear iran is unacceptable. if the iranians are allowed to walk across that threshold with no opposition, that would demonstrat demonstrates other would-be regimes that-- >> is this the year for the showdown on iran? >> simply as a matter of industrial mechanics, how much uranium you need to enrich to get to a bomb this is the year. >> paul: we've been saying that for a while and somehow there's a computer virus that happens that keeps kicking it down. but it's not an ever receding horizon and the international atomic energy looks at iran as nuclear some piles, how much they have and how deeply -- look, you saw benjamin netanyahu at the u.n. in
11:44am
september draw literally a red line and they've come to consensus grew late in the spring of 2013 you're going to have that threshold. >> paul: matt, you've been the optimist in our group on the arab spring and made a strong case for it particularly after the dictatorships for so many decades in that part of the world. give us some reason to think that this could turn out better than it looks to be turning out now. >> it's not over and i think what you see on the struckle in egypt on the ground over power, it's not over. the worst thing is to write them out because they're somehow genetically ill-disposed to democracy. there's decades of authoritarian political positions in these countries that have to be be worked through. it was hard in eastern europe and hard in latin america, but i think there's hope that dynamism of this place can carry through.
11:45am
>> in 50 years, it's going to work out great. >> and military to deal with. >> if there's a theme to what we're saying, the united states has to play an active leadership role rather than passive leadership role. if the united states is passive and barack obama to a certain extent, represents democratic ideas na it should be more passive, this is the kind of world that results. i think places like egypt and syria were looking to the united states at least to have a presence in the transition, but we have not and we're seeing the results. >> paul: where do you think, other than -- where are the potential flash points in this coming year? >> liook, there are many. one of them, we don't talk about europe enough. the crisis in europe is going to get dramatically worse in portugal, spain, italy. there is dysfunction in the european union. that's one place to look. that's going to encourage russia to make moves of its own, you mentioned south
11:46am
africa. south africa is not going in a good direction, it's supposed to be the most optimistic spot on the african continent. so i don't see many bright spots, maybe new zealand, but some say that even new seeland-- >> still ahead, counting to obamacare. big changes could be coming in 2013 for you and your family. thanks to the president's health care overhaul. we'll tell you what to expect when we come back. [ male announcer ] truth is, dayquil doesn't treat that. really? [ male announcer ] alka-seltzer plus fights your worst cold symptoms, plus it relieves your runny nose. [ breathes deeply ] awesome. [ male announcer ] yes, it is. that's the cold truth!
11:47am
11:48am
11:49am
>> well, get ready, america, for the arrival of obamacare, some key provisions of the president's mammoth overhaul kick in come january and joe is here to tell you what to expect. or as we call the bill, joe, the joe regal lifetime
11:50am
employment act, and fated as you are to cover it. what can we expect this year? >> well, look, this -- the bill ramps up starting in october, 2013. so you're going to have three big changes, i think. one is pouring out, as the obama administration is going to be all the regulations creating this law in practice, this is sort after process of ad hoc improvisation. you're also going to see more resistance in the states. 26 states have said they won't participate. >> paul: they won't participate and set up the health exchanges, an insurance market. >> sort of a regulatory body where the subsidies come out so i think air going to see a lot of dislocation in the states and then the third change is going to be just convulsion in the health care market as providers and insurers try to adapt to all of this churn that's going on. >> paul: well, and one of those things in the insurance
11:51am
market is consolidation. you're seeing it where big insurers are getting bigger and doctors and individuals at practices are joining much larger practices because everybody realizes when you get hit with new regulation, you get hit with new costs and the bigger you are, the better you're able to weather something like that. >> it's a total flight to safety and a way to manage risk and this, the major changes among the providers, it's almost-- >> doctors and hospitals. >> doctors and hospitals, it's almost impossible to practice today as a physician unless you're affiliated with a hospital in some way, and what that tends to do is drive up costs. you know, you get local monopolies that can command their own prices, so, that's going to be contributing to a very, very strong trend in terms of premium increases for consumers. >> we're also seeing though, the taxes are hitting right away to pay for this, even before the benefits kick in for individuals who next year, 2014, you're seeing this big
11:52am
medic medical device tax that dan talked about. the medicare surcharge on individuals and is there a-- and companies are going to start to now have to calculate what all this have is going to cost them. are we going to see reductions in the costs of health care from this? >> no, we're going to see exactly the opposite. you know, insurers, they're getting taxed as well and these are all going to pass through to consumers. so, if you saw about two weeks ago the ceo of aetna came out and said-- >> big insurer. >> big insurer, expect a premium rate shock, some consumers, 30, 50, even 100% in some markets, so there's really going to be a big jump in cost. >> paul: kim, what about the politics of this. the resistance of the republicans to this bill has defined politics of the last three years, been a big part of defining politics, are they going to give up the ghost
11:53am
here now and now accommodate themselves to this as a fait accompli? >> i don't think you'll see that. it comes down to look at what you mentioned, the fact there are 26 states and run by republican governors who are not going to take part of the exchanges. and i think there are a lot of republicans who realize this next year is going to be really big and the logistical challenges of the obama administration is going to face in setting this up, almost guarantees there's going to be this convulsion and all kinds of problems and i think that republicans see that this is going to be maybe an opportunity for them to point out to americans some of the things that they had been warning of. unfortunately shall the americans are going to have to experience it firsthand. >> not only are they going to witness it firsthand, i think what you're seeing here, franklin roosevelt created the regulatory or administrative state in the united states. these big social programs gone forward for four or five decades and barack obama is
11:54am
really the heir to the roosevelt legacy and honestly, paul, if you'd listen to what we're talking about here, i think we're beginning to see the implosion of the administrative state, simply collapsing under its own sheer unsupportable weight. it will be very ugly and i think it's going to begin with obamacare. >> paul: and joe, the implementation, you've been writing about this, the implementation of this law is not going well. >> no, it isn't. it's essentially a catastrophe. >> even democratic governors who support the law are find-- are really frustrated with what's coming out of washington. >> that's absolutely right. i mean, it's essentially, they're just very bloody minded, they want to dictate everything out of washington and it's frustrating, even people who support the law because it's so
11:55am
that's double miles you can actually use! how illuminating. what's in your wallet? let me guess, am on the naughty list again? ho ho ho!
11:56am
11:57am
11:58am
>>. >> paul: time nor hits and michigan of the year. >> i think an absolute hit to nasa and the people at the laboratories in pasadena for this amazing feat of putting the curiosity big rover pinpoint on the surface of mars to look for signs of planets geologic past. the can do spirit and spirit of curiosity is alive in america like no place else. i hope it carries us forward beyond the plan. >> it's my person of the year is also arguably the most powerful person in the world. she doesn't give many speeches, she is andrea merkel. think she has done more than anyone in the last year to try to save us from an economic
11:59am
calamity in europe. it's not perfect solution but she has nudged countries to reform. she agreed to some bailouts to keep it going. if the u.s. survives and we all survive it will be thanks to her. >> my people of the year is new york and new jersey and conduct during hurricane sandy. half of them without power, subways, no gas, scenes looked like out of the dresden fire bombing. civilization didn't fall away. there was no crime or violence and things will be look better not morning. it's a testament to resilience and grace under pressure. >> paul: my piss mis go to john roberts for his ruling that the affordable care act is constitutional. he agreed with the four conservatives that the law violated the commerce clause of the constitution which was the